US electronic exchange Nasdaq is selling its stake in LSE after having failed repeatedly in its bid to acquire the London bourse. The US exchange had built up an around a 31-per cent stake in the UK exchange, in a bid to pressure the management of LSE. (See: Nasdaq selling LSE stake for OMX acquisition)

Nasdaq''s decision to offload its LSE stake comes as it battles it out with Borse Dubai to buy Sweden-bases Nordic exchange OMX, which owns exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states. (See: Borse Dubai outbids Nasdaq for Nordic exchange OMX at $3.98 billion)

According to reports, Nasdaq is looking to sell anywhere from half to its entire stake in LSE, which it bought over time at an average of about £11 pounds a share

Analysts believe Nasdaq''s sale could place the LSE under further takeover pressures from the new acquirers of the stake. They say if a large stake were to be sold to a single investor, this could lead in the long term to the LSE being bought outright.

A number of exchanges are believed to be keen to acquire its stake, valued at around $1.58 billion, in the London Stock Exchange (LSE), which operates Europe''s largest stock exchange.

The LSE, which is mainly focused on listing shares of UK and international companies, recently gained shareholder support to buy Borsa Italiana, which analysts say would help it prevent being acquired, amid increasing pressures to consolidate in the sector.

Temasek, the investment arm of Singapore''s government and Deutsche Borse are both said to be interested, in acquiring Nasdaq''s stake in the LSE.

According to a recent Sunday Times report, Temasek had made an approach for the LSE stake, offering to meet Nasdaq''s asking price, while The Financial Mail said JP Morgan, acting as Nasdaq''s adviser, has been approached by Deutsche Borse, Borse Dubai as well as Temasek.

Nasdaq may opt to sell its stake to either of them to beat back the challenge from Borse Dubai in its quest to acquire OMX.

Alternatively, Nasdaq also has the option to sell its stake in the LSE to its rival Borse Dubai, with whom it is currently locked in a bidding battle for the Nordic exchange and jointly bid with it for OMX.

New York-based Nasdaq, which needs overseas acquisitions to gain an international presence, said it would sell its LSE shares and use $1 billion of the sale proceeds to retire senior debt and use the reminder to buy back shares.

NYSE''s advances threaten Nasdaq
In June 2006, its major US rival, the New York Stock Exchange (NYSE), bought pan-European Euronext exchange for $10 billion, creating the first transatlantic stock market, and increasing pressure on Nasdaq to make an acquisition across the Atlantic of its own or end up being dwarfed by the NYSE.

NYSE followed this up in February this year by forging closer ties with the Tokyo Stock Exchange, headed by CEO Taizo Nishimuri, with whom the NYSE CEO John Thain shares an extremely close and warm rapport, (See: NYSE Group and Tokyo Stock Exchange to explore alliance), after having wrapped up a 20-per cent stake acquisition of the Mumbai-based National Stock Exchange in January (See: NYSE-led group acquires 20 per cent stake in NSE).

The NYSE''s advances in other regions prompted Nasdaq''s decision to bid for OMX (See: Nasdaq makes $3.3 billion offer for Nordic bourse OMX). But it''s agreed deal with OMX was trumped by the $3.9-billion cash proposal by Borse Dubai, the holding company for Dubai Financial Market, Dubai International Financial Exchange.

Nasdaq''s chief executive Bob Greifeld, whose takeovger attempts for the LSE was repelled repeatedly by its CEO Carla Furse, is now wary of losing the battle for OMX.

Latest agency reports now seem to suggest that Nasdaq is mulling the option of teaming up with Borse Dubai to jointly present a bid for OMX, which may, perhaps, be its best option rather than risk losing out on the deal altogether, or end up being forced to pay a high price for it by having to compete with the Dubai government funded Borse Dubai.